Inside (the Beltway) Scoop

By | December 21, 2017

Congress Passes Tax Bill; Negotiations on Spending Caps Continue; Government Funding Extended Until Mid-January

With a few days to spare before their self-imposed Christmas deadline, Congressional leaders achieved their goal: the first significant revision of the U.S. tax code in more than three decades. Following the House and Senate’s passage of the Tax Cut and Jobs Act (HR 1) in early December, a conference committee was quickly appointed to reconcile the two versions of the bill.

On December 15, congressional leaders released the text and an explanation of the compromise tax bill agreed to by the conference committee. In a major victory for the research community, the final legislation did not include the House bill’s proposal to tax graduate student tuition waivers. A strong advocacy campaign by universities and graduate students, helped defeat the House proposal. More than 22,000 emails were generated in response to a FASEB e-action, reaching all 100 Senators and 414 House offices. FASEB also sent a letter opposing the graduate student tuition tax to conferees and the House and Senate leadership.

The House passed the revised version of HR 1 on December 19 by a vote of 227-203. Senate approval came the next day via a 51-48 vote, after several provisions were removed to ensure the bill complied with budget reconciliation rules. Those changes forced a second House vote on December 20 that sent the bill to the White House. President Trump is expected to sign the legislation into law by early January.

Unfortunately, the tax bill delayed congressional negotiations about raising the Budget Control Act spending caps. Although House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) said conversations with Democrats were continuing, no deal has yet been reached. Unconfirmed press reports speculate that leadership was discussing an agreement to increase the caps by a total of $200 billion in fiscal year (FY) 2018 and 2019. Although he wouldn’t comment on the numbers being discussed, White House Director of Legislative Affairs Marc Short said in an interview with MSNBC, “We’ve agreed to where we should be on defense spending. We’ve not yet agreed on the nondefense spending angle.”

As the leadership struggled to reach consensus, other members of Congress continued their efforts to raise the caps. House Budget Committee ranking member John Yarmuth (D-KY) and Appropriations Committee top Democrat Nita Lowey (NY) wrote an op-ed in Roll Call urging their colleagues to increase defense and nondefense spending. The piece also noted the importance of investing in critical priorities, including biomedical research, “to keep America safe and prosperous.”

Appropriators took steps to ensure no lapse in government funding while negotiations continued. On December 13, House Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ) introduced a third (H J Res 124) “continuing resolution” (CR), bundling the full year 2018 Department of Defense (DoD) spending bill with a CR for the remaining agencies through January 19, 2018. In addition, H J Res 124 suspended sequestration for DoD, leaving the remaining agencies vulnerable to automatic cuts if congressional leadership fails to reach a deal to raise the caps.

Chairman Frelinghuysen’s proposal quickly ran into trouble in the Senate; 44 Democrats sent a letter to McConnell and Ryan stating their opposition to the House package. The Democrats’ letter cited funding for cancer research programs at the National Institutes of Health (NIH) as one program that could face “devastating cuts” under the House plan. In addition, several Republican Senators made it clear they did not expect their colleagues to prioritize funding for the military over domestic agencies, as doing so would remove any incentive to continue to raise the caps negotiations.

FASEB shares concerns expressed by Senators that non-defense agencies could be left without a final appropriation for 2018. The Federation issued a statement urging congressional leaders to concentrate on finalizing FY 2018 spending decisions for all agencies, rather than singling out funding for one department.

Efforts to resolve the spending impasse were further complicated on December 18. The House Appropriations Committee released the details of a separate bill (HR 4667) providing $81 billion in emergency disaster aid for states impacted by hurricanes and wildfires earlier this year. Although House leadership had been hoping to add the disaster funding bill to the third CR, they were forced to abandon that plan amid resistance from fiscal conservatives about adding more to the deficit.

On Wednesday, Ryan indicated that the House would vote before the end of the week on a CR to fund all government agencies through January 19, 2018. Senate leaders were still discussing their plans as the House prepared to approve the latest temporary spending agreement.

Although the outlook is unclear at the moment, negotiations on raising the caps are expected to resume when Congress reconvenes January 3. Once an agreement is reached, appropriators plan to immediately begin drafting an FY 2018 omnibus appropriations bill reflecting the higher spending limits. Completing work on the omnibus will likely take up to a month.

FASEB will issue an e-action alert in mid-January urging Congressional support of final FY 2018 funding levels for NIH, the National Science Foundation, and other science agencies. Prior agreements to raise the spending caps led to consecutive $2 billion increases for NIH. Senator Roy Blunt (R-MO), chairman of the appropriations subcommittee that funds NIH, has said throughout 2017 that he expects to provide another multi-billion dollar increase for biomedical research once a deal to adjust the caps has been reached.

Blunt’s efforts received strong bipartisan support from 129 House members who signed a letter organized by Representatives Suzan DelBene (D-WA), David McKinley (R-WV), and Peter King (R-NY). The December 19 letter asked the House Appropriations Committee to ensure that forthcoming FY 2018 funding legislation includes “no less than $36 billion for NIH, equal to the level provided by the Senate Appropriations Committee.”